In 1929, The Roaring Twenties came to a catastrophic end when the stock market crashed. After 9 years of market value reaching peak highs, they dropped to rock bottom, ushering in to the Great Depression. Due to this, the demand for goods decreased.
Although the auto auction market isn’t as drastic as the nation’s economy, it does go through periods of change. Big Valley Auto Auction has survived these changes since 2008, but currently, the auto auction industry is at a low point when it comes to inventory. With fewer dealers bringing in inventory, buyers aren’t overly eager to buy what they see.
Not only do these changes impact our business, but they impact our buyers and sellers as well. That’s why we’re gonna go on a little virtual cruise, like one of those late night drives with friends, where you talk about life. We’ll take a deep dive into the current condition of the auto auction market, and how we at Big Valley Auto Auction ensure the protection of buyers and sellers, like yourself, during this time. So hop in, fasten your seatbelt, roll the windows down, and let’s roll.
What is the Current State of the Auto Auction Market?
As of July 2023, the auto auction market is lower than normal. On our end, Big Valley Auto Auction has gone from running 500+ units a week to approximately 400, which is a 20% decrease in inventory. The market is not where we want it to be, and it’s actually at its lowest point since COVID hit in 2020. This year is seeing a significant change, and there are 2 main reasons for this shift in the market.
Reason #1: Economy
The current state of the economy impacts every business in general. When the condition of the economy declines, the automotive industry gets hit.
The chart above projects how the Real Gross Domestic Product from Q3 (July 1st to September 30th) to Q4 (October 1st to December 31st.) will drop.
Real Gross Domestic Product (GDP) gives information on how an economy is performing. This has gone down from 1.1 to -1.2, showing a dip in the economy’s condition. The Real GDP (YOY) is the economy’s performance year-over-year, which has also declined.
Real Disposable Income, which is the amount of money leftover after a person pays taxes, has decreased. This means people are saving any extra money and spending less on items that aren’t food, bills, or other necessities.
Lastly, Real Consumer Spending is money used by a household for personal use and enjoyment. Similar to the Real Disposable Income, it has seen a downward shift, due to people saving their money.
A low economy puts sellers in a situation where they’re less likely to take the risk of selling, and buyers see this as an opportunity to undervalue the vehicles that are being sold.
Reason #2: Season
The market is always fluctuating, but more so in the summer. The summer season is always a slow period, but due to the current state of the economy, auto auctions aren’t seeing any big increase in inventory.
We can’t speak for other auto auctions, but Big Valley Auto Auction generally recovers within 2 months, once the summer season is coming to an end. The market shift starts around May and ends by August, so 2-3 months is the average timeframe it takes for business to pick back up.
But as mentioned above, market fluctuations do play a factor. For example, in the month of July 2023, inventory was low for Big Valley, but sales conversion was high. This means that we received 400 units, which is less than usual, but sold 250, meaning 62% of inventory sold. However, these fluctuations affect everyone differently.
How Does the Current Auto Auction Market State Affect Me?
With the recent shift and uncertainty in the auto auction market, sellers and buyers are impacted as well. It’s important that you, as a buyer or seller, are prepared for how this state impacts you personally.
Sellers:
If you’re a seller, you may be reluctant to bring in your inventory. You may be holding on to inventory because, more than likely, you paid a lot of money for those vehicles and believe you won’t make a profit.
With the doubt of making back what they paid, sellers would rather take a gamble by keeping their inventory, in hopes to sell at their own lot. But, in doing so, their vehicles may lose value the longer they don’t sell. To avoid this situation, we recommend promoting your inventory as much as possible, or save the trouble and send it to an auto auction to help with the sales process.
Buyers:
Since many sellers are less than willing to bring their inventory, that leaves you with less vehicles to choose from. Dealers do show up, meaning they are still interested in making a sale, but some buyers try to give unfairly low offers, causing a sale to fall through. A seller could be asking for $7,000, with the lowest offer they’ll take is $5,000. If a buyer offers $3,000 or isn’t willing to pay at least $5,000, the auctioneer will dismiss the offer and move on.
Knowing how these factors can impact you, seeking assistance from an auto auction may be a good choice to help your business through these changes.
How Can Big Valley Auto Auction Help Me During This Time?
Times are already tough, and going through them alone just makes it harder. We know the importance of helping others, which is why we offer assistance to all of our sellers and buyers.
Sellers:
We understand that you might be skeptical about selling right now, but we do offer other ways to sell your vehicles. If you’re struggling to sell at your own lot, we’ll do our best to help you make that sale, here.
We’ll do a condition report of your vehicle to post online. This provides your vehicle with a visual and cosmetic inspection of its interior and exterior. In the event you can’t physically attend the auction, the condition report will accurately represent your vehicle.
A condition report also plays a pivotal role in online sales. The information it provides, such as its AutoGrade, which is the grade a vehicle receives on a scale of 0-5, is made visible online, bringing more views to your vehicle.
We also offer car washes and other reconditioning services to help enhance the appearance of your vehicle.
Buyers:
Even though inventory may be less than usual, Big Valley Auto Auction will help you find the car you’re looking for, at a price you’re willing to pay. If we don’t have the vehicle you’re looking for, we will do everything we can to find it. This includes connecting with other dealerships to get them to bring that vehicle to us, for you.
In the event that we fail in our search for you, we suggest waiting until the next week, to see our updated inventory. There’s no guarantee that we’ll have what you’re looking for, but the world works in mysterious ways. There’s always a chance that the vehicle you’re searching for will pop up.
How Can I Benefit From the Current Auto Auction Market?
A low market doesn’t sound promising for anyone. However, it’s not all bad, because there are benefits for sellers and buyers alike.
Sellers:
With the lack of inventory, that leaves Big Valley Auto Auction with plenty of spots available for you to run your vehicle. This is a good position to be in because you’ll have less competition when it comes to selling.
What if I Prefer to Sell at My Own Lot?
If you feel confident and safer selling your vehicle at your own lot, go for it! Just keep in mind that the longer it doesn’t sell, the lower it goes in value. This is called “depreciation.” In the event you end up in this unfortunate situation, and your vehicle doesn’t sell within a month, you can try your luck here at Big Valley Auto Auction. We know it’s hard to let go of your vehicles, but try not to get too attached to your inventory. We’re here to help you get the money you’re looking for.
You can also capitalize on a down market by getting maximum exposure while your vehicles are sitting in your lot. You can use this time to get a condition report, get photo representation online, and get your vehicle fixed up. It’s basically like training during off-season for a vehicle.
Buyers:
Right now is a good time to capitalize on the current market, as prices of vehicles may be lower. It’s like buying clothes from the clearance rack of a store. Those clothes are in that section because they didn’t sell fast enough, so the store marks down the price to get rid of them.
Similarly, the dealers who decide to sell during this time are more than likely trying to sell their vehicles as soon as possible. However, this isn’t a reason to give low offers. If a dealer is asking for $7,000 and it’s in proper condition, don’t try to negotiate $3,000. Instead, reach a compromise that works for both of you.
Understanding how Big Valley Auto Auction can provide support during the current market can help you figure out how to capitalize on this situation.. Considering the ways you can take advantage of the current market, using a market report is another tool that can add more benefits.
Sellers:
Big Valley Auto Auction’s Market Report lets you know how much your vehicles are going for at our auctions, which will prevent you from overpricing your vehicle. This also keeps you informed with the market trends in the Rio Grande Valley, Texas area, to help you maximize your profit and minimize your loss.
Buyers:
The Market Report is an excellent tool for buyers because it tells you the year of the vehicle, how many miles it has, and what it sold for. This information is beneficial in letting you know if your vehicle has a lot of wear and tear, and if the price matches its condition.
Recognizing the benefits Big Valley could bring may cause you to ask if Big Valley Auto Auction meets your preferences.
Is Big Valley Auto Auction the Right Choice for Me?
It took the United States 15 years to recover from its 1929 stock market crash. Fortunately, it only takes Big Valley Auto Auction a few months to bounce back from the summer “off-season.”.
Whether you're a dealer who may be skeptical to sell your vehicle or a buyer who has less inventory to choose from, you can use this article as a guide to help you get through the tough 2023 auto auction market.
Now that you know the state of the 2023 auto auction market, learn the 3 tips you can use to sell your vehicle when the market is down at any point in the year.
